AUSVEG’s solutions to grower-retailer ‘power imbalance’

AUSVEG is calling for necessary reforms to address supply chain “power imbalances” in its submission to the Senate Select Committee on Supermarket Prices.

This comes as a new industry sentiment survey conducted by the peak industry body for Australia’s vegetable, potato and onion sectors reveals 37% of surveyed growers are considering leaving the industry in the next 12 months – up from 34% mid last year.

Input cost increases, poor retail pricing and labour costs are the top three reasons vegetable growers are considering closing their farms.

Unless addressed, AUSVEG says these issues will continue to threaten the viability of vegetable growing business, contribute to significant food waste, threaten the availability of fresh produce for Australian consumers, and ultimately drive retail prices higher as growers leave the industry and supply reduces.

“As Australian vegetable growers continue to face livelihood-threatening challenges that are driving the cost of supplying vegetables higher and higher, it is crucial to ensure growers receive fair and sustainable farm-gate prices for their produce,” says AUSVEG CEO Micheal Coote.

“Instead, growers tell us they are under more and more pressure from retailers to accept lower and lower prices, and often have few options but to do just that. A major contributing factor is the concentration of market power in the hands of retailers that are often the biggest customer for many vegetable growers.

“With our latest industry survey confirming sentiment is at an all-time low in the sector and getting worse, this inquiry is an opportunity to embrace reforms that support the long-term viability of the vegetable growing businesses that feed the country.”

What’s needed

Providing greater certainty for growers in arrangements with retailers, making the Australian Food and Grocery Code of Conduct mandatory, introducing enforceable penalties and fines for breaches, and introduction of a genuinely independent complaints and arbitration mechanism are among the recommendations put forward in the AUSVEG submission.

The industry body has also cautioned against interventions that artificially distort the market, and further disadvantage vegetable growers.

“A vibrant and successful retail sector is integral to the success of the Australian vegetable industry, and all businesses across the supply chain – from vegetable growers to retailers – need to be profitable to keep operating,” says Mr Coote.

“While fair and sustainably prices paid to vegetables growers at the farm gate are a crucial part of the equation, they are just one part of a complex range of challenges growers are currently facing.

“Unless we see changes that address the multitude of issues contributing to growers’ margin squeeze, then more and more vegetable farmers will leave the industry, which will ultimately just cause prices to increase for consumers.”